US President Donald Trump plans to nominate Federal Reserve Governor Jerome Powell to be the next chairman at the US central bank, three people familiar with the decision said.

Trump, who has said he’ll announce his pick Thursday, would be choosing a former private-equity executive who favours continuing gradual interest rate increases and sympathises with White House calls to ease financial regulations. The immediate market reaction was muted, with the dollar briefly paring gains while stocks and bonds were little changed.

Powell declined to comment when approached by a reporter outside his Washington-area home. The Wall Street Journal earlier reported Trump has selected Powell.

If approved by the Senate, the 64-year-old former Carlyle Group LP managing director and ex-Treasury undersecretary would succeed Fed Chair Janet Yellen, who has raised borrowing costs four times starting in late 2015 and just begun scaling back the central bank’s US$4.5 trillion balance sheet.

A Republican appointed to the Fed in 2012 by Democratic President Barack Obama, Powell has earned a reputation as a non-ideological and pragmatic policymaker. While he hasn’t played a prominent public role in formulating and explaining monetary policy, he has generally backed Yellen’s cautious approach to withdrawing stimulus.

“He’s going to bring continuity to monetary policy,” said John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina. “I’ve long argued that of the people involved, he’s probably the easiest confirmation – the Senate has confirmed him before. And he seems to be a fellow who knows what is going on.”

Under Yellen, whose four-year term as chair expires February 3, the Fed has overseen an economic expansion now in its ninth year and a fall in unemployment to a 16-year low. It would be up to Powell to keep that growth on track, under a president who has stated a preference for much faster gains in gross domestic product and continued low interest rates.

Powell was already the overwhelming favourite on betting websites after reports from a week ago said he would succeed Yellen. Traders have been increasingly pricing in his selection since then, bidding up Treasuries after yields reached the highest since March.

The ninth post-war leadership change at the Fed comes at a critical juncture – the transition to more normal monetary policy after a decade of unprecedented stimulus to minimise the damage from the financial crisis. It’s at this stage that policy mistakes will be made or avoided.

Raise rates too quickly and Powell risks stalling the third-longest US expansion and hurting a stock market rally for which Trump often takes credit. Tighten too slowly and a hot economy might boost the cost of living, inflate asset bubbles and fuel investor doubts about the Fed’s inflation-fighting credibility.

Getting that balance right will require flexibility, independence from political pressure, and a deep understanding of how the economy and the American labour force are changing.

A law school graduate, Powell will be the first Fed chair since Paul Volcker in the 1980s without a PhD in economics. He’ll now have to work with the more than 300 PhD economists at the Fed Board of Governors to decide how to respond to inflation that policymakers consider too low, and stock and other asset prices they view as lofty.

Since joining the central bank, Powell spearheaded the Fed’s response to the 2014 flash crash in Treasury debt and the overhaul of the flawed London Interbank Offered Rate benchmark. He’s also been the point person at the Fed’s Board for handling such unglamorous-yet-essential duties as oversight of the financial payments system.

Powell, who goes by Jay, served at the Treasury Department under President George H. W. Bush, eventually ending up as undersecretary for domestic finance. It was during his time at the Treasury in the early 1990s that he was among the policymakers who successfully headed off a market meltdown after Salomon Brothers tried to corner a Treasury debt auction using phoney bids.

Powell spent much of his career outside of government working in the financial industry, first at investment bank Dillon Read&Co. and later at Carlyle, where he set up the private-equity firm’s industrial group. His 2016 financial disclosure listed assets of as much as US$55 million.

“Jay was somebody who had experience in both business and in government and also had a legal background,” Carlyle co-founder David Rubenstein said in an interview earlier this year. “That’s a rare combination.”